The spectacular appreciation of the shekel towards the US greenback this 12 months, by about 10%, has occasioned substantial losses for Israelis invested in US belongings. The DXY greenback index, which measures the worth of the US greenback towards a basket of main currencies, has additionally fallen by 10% to date this 12 months. Towards this background, there are those that are questioning whether or not that is maybe the time to extend publicity to the greenback. A lot of the market specialists say that it’s not.
“The sharp fall within the worth of the greenback towards the shekel stems primarily from the depreciation of the greenback on world markets,” says Financial institution Leumi strategist Kobby Levi. “Israeli buyers who purchased euro-denominated bonds, for instance, have been hit lower than these uncovered to the greenback.
“Our expectation is that the geopolitical enchancment (in Israel), which is already manifest in enchancment in pricing in giant elements of the capital market, such because the native inventory and bond markets, will even have an effect on the shekel and can assist appreciation towards the basket of currencies.” In different phrases, in Levi’s view, the shekel might proceed to strengthen. For that cause, he says, “There’s no room for decreasing forex hedges regardless of the low charges.”
Meitav chief economist Alex Zabezhinsky additionally commented earlier this week on the power of the shekel and its penalties for the general public’s asset portfolio. “The appreciation of the shekel might go a great distance,” he wrote, including that the rationale for that was that the general public in Israel was prone to promote extra overseas currency-denominated belongings, to the tune of billions of shekels. On the premise of the info he gathered, he says, “The load of foreign-currency-linked belongings (not together with abroad shares) within the public’s asset portfolio was about 15% in March. That’s nonetheless 2% greater than the secure ranges that prevailed till the top of 2022. To return to the burden at the moment, the general public (together with monetary establishments) might want to promote overseas forex to the tune of over NIS 100 billion.”
Zabezhinsky additionally factors to the hyperlink between the shekel-dollar trade charge and the efficiency of the S&P 500 Index within the US. When the index rises, the trade charge falls, i.e., the shekel strengthens. In his view, there’s nonetheless room for the shekel to strengthen, to ranges of NIS 3/$ and even decrease.
Modi Shafrir, chief monetary markets strategist at Financial institution Hapoalim, additionally recommends decreasing the overseas currency-denominated element of the portfolio, estimating that the shekel will proceed to strengthen. That is for 2 important causes: “The primary is that the fundamental forces supporting a powerful shekel are anticipated to strengthen within the coming years, reminiscent of Israel’s giant steadiness of funds surplus. The second is that, in my view, monetary establishments will shortly begin to scale back their forex publicity (due to the swap of cash from funding within the S&P 500 to the Tel Aviv Inventory Change to enhance returns, H.S.).
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Rami Dror, CEO of Worth Superior Investments Group, provides, “The shekel-dollar charge is now consolidating at outdated/new ranges of round NIS 3.5/$. What stored it excessive prior to now eighteen months was mainly the regional security-geopolitical state of affairs. Following the modifications which have taken place within the area, it’s now at a brand new equilibrium degree, and in my opinion we will proceed to see the shekel-dollar charge on this space.”
Printed by Globes, Israel enterprise information – en.globes.co.il – on July 8, 2025.
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